Green Light Specials on Media Consolidation

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by Michael Roberts

If the FCC loosens its rules, will media giants go on a radio-and-TV shopping spree? Absolutely.

For most people, late December is a time for family, friends and racking up tremendous personal debt, not for professional crises. But things didn't play out that way for Cindy Velasquez, vice president and general manager of Channel 7. A dispute between her outlet and AT&T Broadband over a proposed cable news channel resulted in dueling attack ads, the filing of a lawsuit by AT&T (it was subsequently withdrawn) and a cauldron's worth of bad blood that bubbled steadily for weeks before the disagreement was resolved on the cusp of the new year.

In a pact that AT&T spokesperson Jeannine Hansen says was finalized on January 10, the cable purveyor agreed to provide Channel 7 with space on the digital spectrum for the station's dreamed-of service, which would essentially loop its news product on a 24-hour-a-day basis. (Down the line, Channel 7 may also be permitted to launch a digital Spanish-language channel.) Because -- rightly or wrongly -- Channel 7 isn't seen as having one of Denver's more powerful news operations, these ambitious expansion plans have prompted plenty of speculation among broadcasting insiders about its whys and wherefores, with one theory far outstripping the rest: McGraw-Hill, Channel 7's owner, is building up the property in order to sell it.

Velasquez dismisses this hypothesis as a "false rumor," and Ed Quinn, president of McGraw-Hill's San Diego-based broadcasting division, is even more definitive: "That's been talked about forever, and there's nothing to it." But no amount of denials is apt to entirely quell such rumblings, if only because they're being heard at a time when tremendous change for the communication industry is in the offing.

Within a few months, the five-member Federal Communications Commission is expected to modify or lift several important restrictions originally put in place to limit media consolidation. One states that a single enterprise can't own TV stations that reach more than 35 percent of the nation's viewers. Others limit the ability of firms to purchase and operate multiple TV stations in the same community and prevent an entity from holding the deeds to more than eight radio stations in a single market (Clear Channel possesses the current maximum in Denver). And that's not to mention what's known in the trade as cross-ownership. In most cases, businesses are forbidden to own TV stations, radio signals and daily newspapers in the same market -- but probably not for much longer.

The FCC has been hinting about addressing these issues since two days after 9/11, when the commission announced that it would begin reviewing cross-ownership limits and more. During the succeeding year-plus, one FCC commissioner, Michael Copps, has regularly expressed concern about the negative consequences that might occur if the rulebook is rewritten, as have organizations such as the Writers Guild of America and the American Federation of Television and Radio Artists. A number of prominent lawmakers have weighed in, too, with perhaps the unlikeliest being Kay Bailey Hutchinson, a Republican senator from Texas. Hutchinson was quoted in the January 15 USA Today as saying that "encouraging local competition and preventing one company from having too much control of the content in a single media market is essential for the best interest of consumers and our country."

But voices like these are apt to be drowned out by the chorus of prominent individuals and interests certain that the time for these regulations is past. Predictably, networks and content providers such as AOL Time Warner, Fox, NBC and Viacom, all of which would profit handsomely from the dissolution of the directives, have put their brawn behind the change brigade. So, too, has FCC Chairman Michael Powell, son of Secretary of State Colin Powell, who from all appearances couldn't be any more in the industry's pocket if he'd been sewn into it at a clothing factory. On Powell's watch, the FCC ordered a dozen studies by what was dubbed the Media Ownership Working Group, with virtually all of them finding that, thanks to the Internet and other alternative news sources, the communications landscape is more diverse than ever before. By extrapolation, these conclusions imply that decrees preventing greater consolidation are simply outmoded.

That's something Dean Singleton, head of MediaNews Group, which owns the Denver Post and more than a hundred other newspapers across the country, has known in his bones for many years. In a Westword profile published before the FCC's disclosure that it would be reviewing cross-ownership ("Press for Success," August 2, 2001), Singleton predicted that the guidelines would soon undergo renovation, and he was ready to take advantage.

When these alterations didn't happen as quickly as Singleton expected, he moved ahead anyway. According to his company's Web site,, KTVA-TV, a CBS affiliate in Anchorage, Alaska, was purchased "in anticipation of changes in the regulations governing ownership of newspapers, radio and television." In two Texas towns, Graham and Breckenridge, that are too small to fall under cross-ownership statutes, he's gone even further. In each burg, MediaNews owns newspapers -- most prominently the Graham Leader, which Singleton began his career competing against -- as well as a pair of radio stations that work hand in hand with the print operations.

These linkages "have worked out really well," Singleton says. "The newspaper news operation has added a lot of strength to the radio operations, and the cross-sale of advertising has been very successful, especially when it's cross-sold with Internet. I'm anxious to try it in larger markets." The minute the FCC gives him the go-ahead, Singleton will get this chance. "In some of our various newspaper markets, we are preparing to purchase both radio and television. In some cases, we already have agreements to do so, subject to the change in the rule."

At present, Singleton adds, no transactions of this sort are pending in Denver, but that doesn't foreclose the possibility of one hitting the radar screen soon. Last year, the Denver Newspaper Agency, formed to handle business matters for the Post and the Rocky Mountain News as part of a joint operating agreement, almost hooked up with the Newspaper Radio Corporation, which is overseen by Tim Brown, son-in-law of notable rich fella Phil Anschutz, to launch KNRC-AM, a news-radio station. When this romance soured at the last minute, Brown put KNRC on the air without DNA assistance ("Dialing for Differences," July 18, 2002). Singleton doesn't say how involved he was in these negotiations, but their collapse clearly hasn't turned him off of radio. "Our experience with newspaper-radio in other markets has been good," he says. "So it's quite possible we would buy a radio station in Denver."

Television is another story. In repetition of a statement that turned up in the January 10 Denver Business Journal, he says he may not purchase a TV station here. Heavily influencing Singleton's reasoning on this topic is the Denver Post's partnership with Channel 9, which already accomplishes many of the goals envisioned by cross-ownership boosters, including content sharing, joint projects and promotional opportunities ("Let's Get Together," October 31, 2002). Moreover, Singleton and Channel 9's owner, Gannett, have quite a chummy relationship. Gannett holds a 19 percent stake in the California Media Partnership, a consortium of more than fifteen newspapers over which MediaNews has majority control.

Still, Singleton doesn't permanently reject the possibility of picking up a TV station in these parts -- even one lacking a news department. "That might be a positive," he says. "In a market where you have a newspaper that has tons of news, it might make more sense to buy a station without news and program it your way than to buy it with news."
These comments are intended as general, not specific, but they can't help but make area observers think about Channel 20, a fast- growing station owned by Chicago's Fred Eychaner. An entrepreneur known for being publicity-shy, Eychaner nonetheless agreed to speak last year with Forbes magazine, which traced his career through a series of small-time journalism jobs to his buy of a printing press that helped him build his fortune. He used dollars made by printing publications such as the Chicago Reader to buy a tiny, one-watt radio station and, later, WPWR, a Chicago television station, and Channel 20, which was bankrupt when he paid $12 million for it in 1994. Both TV outlets became part of the UPN network, with Channel 20 filling out its schedule with sitcoms, other syndicated fare, and sporting events featuring the Colorado Avalanche, the Denver Nuggets and, starting next season, the Colorado Rockies. To Greg Armstrong, Channel 20's vice president and general manager, supplementing this mix with news isn't necessary.

"At a couple points in our history, we did studies about getting into the local news market," Armstrong says. "But it's very expensive, and it's something that, as a company, we don't have any real experience in doing. Plus, there's a lot of good news programs in this market. How much more do you want? So we decided to be the entertainment station -- and a big part of that here is sports. We want to make you laugh and help you keep up with your favorite sports teams."

In Chicago, this formula pushed the value of WPWR into the stratosphere, and last year, Eychaner sold it to mogul Rupert Murdoch for $425 million. That makes Channel 20 Eychaner's only station, and since he's a generous supporter of the Democratic Party and Northwestern University's Medill Innocence Project, he could presumably use more dough. On top of that, Singleton says he's known Eychaner for 25 years and considers him a personal friend. But thus far, Eychaner has shown little interest in parting with Channel 20. "Before the Chicago station was sold in the spring of 2002, he was approached about adding Denver to the sale," Armstrong says. "But it was never on the table. He said, 'We're not going to sell Denver. You're doing a great job, and I want you to continue.'"

That leaves Channel 7, which has been on the block at least once previously. As noted in an article in the Hollywood Reporter, McGraw-Hill tried to peddle its broadcasting division back in 1997, when what was known as the Morris Trust doctrine would have let it spin off its stations tax-free. However, the company backed away when this loophole closed and bids from interested parties such as the Walt Disney Company failed to reach expectations.

By today's standards, McGraw-Hill's broadcasting division is small, containing just four stations: Channel 7, plus fellow ABC affiliates in Indianapolis, San Diego and Bakersfield, California. A media behemoth wouldn't need much of an appetite to gobble them up. As a bonus, the stations have what a corporation looking to pad its acquisition roster might see as attractive extras -- although Quinn mentions these add-ons to demonstrate why McGraw-Hill would like to keep them.

For one thing, the outlets are highly automated, thanks to a system called Parkervision, which lets a handful of behind-the-scenes personnel do jobs that previously required many more bodies ("Robo News," November 29, 2001). In addition, a master-control center in Indianapolis switches between national and local programming for all four stations, saving even more moolah. Finally, the McGraw-Hill stations outside of Denver all have news channels on the analog system rather than its digital counterpart. In an exceedingly lame, balance-free article in the December 30 Rocky Mountain News, Channel 9 president Roger Ogden sniffed at this concept -- a dubious stance, since Gannett is putting together a variation of it that would shuffle through local news broadcasts from across the country. But Quinn has done well with this model in Southern California. "The San Diego cable channel has been up and running since 1992, and it delivers more audience than CNN, Fox, MSNBC and CNBC in the San Diego market. It's been very profitable for the cable company and the TV station." The Indianapolis channel, formed just over a year ago, and the one in Bakersfield, which is a little over six months old, aren't nearly as lucrative, but Quinn is confident that eventually they will be.

Channel 7 failed to convince AT&T to fork over an analog channel, and since its digital equivalent will reach around 60 percent fewer viewers, the station may have a tougher time cashing in. But Velasquez, the station's vice president, sees other benefits, like letting more viewers discover that Channel 7 has a credible news product. The outlet finished last in a survey of over fifty stations made public by the Project for Excellence in Journalism last November, and the ratings for its 10 p.m. newscast continue to lag far behind those at channels 9 and 4, even after the return last year of Denver news vet Mike Landess. But Velasquez is encouraged that the 10 p.m. numbers didn't fall last year despite what she calls "lackluster" lead-ins courtesy of ABC, and she boasts that newscasts at 5 and 6 p.m. are either in second place or tied for second behind Channel 9 in key demographic categories. As a result, Channel 7 is bringing in more advertising revenue than many would expect.

"The station's profitability has increased substantially in my time here, and we're very happy about our progress," Velasquez says. "We're going where we want to go."
There's no way of knowing if these remarks will dissuade potential TV-station buyers. But a slew of them are undoubtedly window- shopping at this very moment.

Permission granted: Since the Denver Post updated and expanded its approach to acknowledging errors ("Internet Interruption," November 11, 2002), some of its correction sections have seemed practically as long as Master of the Senate. But as of January 21, the paper had not yet caught the botch that turned up in "Immigrant Honors Student Seems Safe From Deportation For Now," an offering written by Washington bureau reporter Mike Soraghan for the January 16 edition. The first paragraph identified Jesus Apodaca, a Mexico-born teen who was at the center of well over twenty articles, editorials and columns published by the Post last year, as "Jose Apodaca." To anyone who thinks Hispanic- sounding names that start with "J" are interchangeable, I respond, "Jose Christ!"

Technically, "Successes, Sorrows Trail Jeffco Sheriff," a January 13 effort by reporter Kieran Nicholson, didn't require a correction. In many ways, though, the article demanded an apology far more than did the comparatively benign Apodaca goof.

The Nicholson piece featured controversial Jefferson County sheriff John Stone on his last full day in office. The quotes Stone offered weren't particularly revelatory, but a line about the reporting of the item certainly was: "Stone, who consented to be interviewed for this story only if his critics were not contacted..." In other words, the Post not only allowed the outgoing sheriff, whose actions following the 1999 shootings at Columbine High School made him one of the most divisive figures in the state, to determine under what conditions he would speak to the paper while he was still a public official, but it also let him affect how the article was assembled.

Post editor Greg Moore concedes that he didn't know about this arrangement ahead of time. But he defends it, in a manner of speaking. "Obviously, this is not something we want to do even infrequently," Moore says. "We don't like news sources to dictate terms for interviews. But there are some special cases."

As Moore accurately points out, Nicholson's article wasn't devoid of criticism. For instance, it allowed that Stone's office had argued against releasing thousands of Columbine documents such as those that were made public earlier this year, and alluded to detractors who suspect that still more essential paperwork remains squirreled away.
But with Stone on his way out, Moore says, the Post felt it would have difficulty pinning him down in the future. "After this latest document dump, we were trying to tie together some loose ends. We wanted to close the book on his tenure from his perspective," he elaborates. "And I think it was the right thing to do, the ethical thing to do, to tell our readers under what conditions we did the interview."

Whether the arrangement itself was right and ethical is another question.

Article copyright Westword LLC.

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The media's job is to interest the public in the public interest. -John Dewey